Can I get clarification on US-Source income for NRA LLC federal income tax requirements?

Thank you for explaining! So if I'm living in Europe and my LLC is registered in Wyoming, but all my clients are US-based companies, I'm not generating US-source income because the work is physically performed outside the US? What about passive income like royalties from software I create, or if I have some kind of SaaS product that US customers pay for monthly? Would that be considered US-source?

If you're physically in Europe while performing the development work, then yes - even with US clients, that income generally wouldn't be US-source because services are sourced where physically performed. For passive income like royalties or SaaS subscriptions, it gets more complex. Royalties paid by US persons for the right to use intellectual property in the US are considered US-source income. Similarly, SaaS subscription income could be considered partly US-source if your software is being used in the US. This type of income might be subject to a 30% withholding tax, though this rate can be reduced by tax treaties depending on your country of residence.

Does taxr.ai actually understand international tax stuff? I've tried tax pros before who said they understood NRA issues but then gave me completely wrong advice. How specific do they get with determining US-source income for digital products and services?

I'm skeptical about any automated service handling something this complex. There are so many exceptions and special rules with international taxation. Did they actually give you documentation you could rely on if audited? And how did they handle the tax treaty implications?

They definitely understand international tax issues - that's actually their specialty. They provided detailed analysis of each income stream in my business, explaining exactly why it was or wasn't US-source. For digital services, they looked at where I performed the work, where the servers were located, and where the intellectual property was being used. Yes, they provided comprehensive documentation including citations to specific IRS regulations and tax court cases. Their analysis included the tax treaty between my country (Germany) and the US, showing which specific articles applied to my situation and how that affected withholding requirements.

How does this service actually work? I don't understand how a third party can get you through to the IRS faster than calling directly... seems suspicious.

This sounds like a scam. There's no way to "skip the line" with the IRS. If this actually worked, everyone would use it and then the system would be just as backed up as regular calls. Plus, aren't you worried about sharing your tax info with some random company?

The service uses a combination of automated dialing technology and timing algorithms to navigate the IRS phone system during periods when wait times are typically shorter. They don't actually "skip" any lines - they just handle the waiting and navigation for you. I was skeptical too initially, but they don't need access to any sensitive tax information. They just connect the call and then completely drop off - it's just you directly talking to the IRS agent. It's basically like having someone repeatedly call and navigate the phone tree until they get through, then they transfer the call to you.

Do you know how to determine which treaty benefits apply? I'm in Canada with a Delaware LLC, and I've heard we have a good treaty, but the actual text is like reading another language. Is there a simple way to know which parts matter for my situation?

The easiest way to determine applicable treaty benefits is to look at the technical explanation that accompanies most treaties. For the US-Canada treaty specifically, there are provisions in Article VII about business profits that would likely apply to your LLC. The key is identifying your specific type of income (services, royalties, etc.) and then finding the corresponding article in the treaty. For Canadian residents with US LLCs, you generally won't be taxed on business profits unless you have a "permanent establishment" in the US - which usually means a fixed place of business like an office.

Yes, there are filing requirements even without US-source income. If your LLC is treated as a "disregarded entity" and is 25% or more foreign-owned, you must file Form 5472 along with a pro-forma Form 1120 annually. This is required under relatively new regulations, and the penalties for non-filing are steep ($25,000+ per violation). This filing requirement applies even if you have zero US-source income and owe no US tax. It's primarily an information reporting requirement to track foreign ownership of US entities.